What is an Installed Base?
What is an Installed Base?
An installed base (abbreviated: IB), also referred to as install base, is simply a representation of all of a company’s products installed at its customer locations.
Machinery manufacturers or Industrial OEMs build & sell machines (also called equipment) to other manufacturers who in turn use those machines to create their own products. Thus, for machinery manufacturers, an installed base would be a sum total of all equipment installed & operational at various customer locations.
A machinery installed base can feature equipment that was installed more than a decade back because certain machines are certified for longer life cycles spanning 10, 15 or even 20 years.
The standard definition of an installed base does not cover the number of equipment which are not in use anymore. Equipment typically retires when it doesn’t make economical sense to continue operating it. This would happen when the cost of repairs or damage repair is higher than the outcomes delivered by the equipment. It’s also common to replace an older equipment with an upgraded one before equipment end of life because of a cheaper yet effective variant or due to a steep discount offered by the equipment manufacturer.
While it’s fairly common in the manufacturing industry to consider only active equipment while calculating the total spread of an installed base, this approach reduces a rich source of information to a simple, derivative report of all active customers. At best, it is an idle list of customers’ names and contact numbers.
In reality, an installed base is much more than a report of active customers or equipment. By broadening the installed base definition to both active & inactive equipment, an industrial manufacturer can derive historical trends as well as predict next set of opportunities from current customers as well as prospects. A well maintained installed base data can provide insights into historical win/loss rates, competitors & competing brands in a segment/geography, required distribution of sales & service professional in a particular territory, customer drift trends, short terms & long term opportunities such as upgrades and consumables, evolving customer segments & customer needs, and much more. Healthy, usable installed base can give insights needed for both new equipment sales as well as aftermarket sales.
Most industrial OEMs cannot take advantage of installed base data & consider it only an active customer report because they would need specialized tools which can extract & present their installed base data in an actionable format.